Finance Committee Workshop Characteristics of

Transcript:Finance Committee Workshop Characteristics of:
Finance Committee Workshop Characteristics of Financially Vital Congregations * Financial Transparency Sharing clear, easy-to-understand financial reports with members Implementing a strong system of internal controls Providing for an annual audit of the financial reports Missional Budgeting and Fundraising Facilitate the congregation-wide activity of discerning, planning and budgeting for God’s mission Best Practices Engage in practices that ensure their current financial health and long-term sustainability * Source: UMC Guidelines, Finance: Handling God’s Money in the Church Financial Transparency – Financial Reports Statement of Financial Position (balance sheet) Reflects the overall financial position of the organization at a given moment in time. It shows the accumulated results of all the individual years of your organization’s operations put together. Assets = what you have or what you are owed Liabilities = what you owe Net Assets = what’s left (Assets – Liabilities) Unrestricted – can be used for operating expenses or any other purpose Restricted – designated to a specific program/project (examples: Mission Fund or Youth Ministry fund) Financial Transparency – Financial Reports (continued) Statement of Financial Position (balance sheet) Assets – examples and what to look for and/or ask: Cash – do I have enough to pay the bills? Is it properly invested to maximize interest? Have we protected restricted funds? Is the balance increasing or decreasing? Accounts Receivable (money owed to us) – are we collecting on a timely basis? Are there any that will never be paid? Do we have an allowance for doubtful accounts (an estimate of those that will not be paid)? Fixed Assets (Land, buildings & equipment) – have we invested enough or too much? Financial Transparency – Financial Reports (continued) Statement of Financial Position (balance sheet) Liabilities – examples and what to look for and/or ask: Accounts payable (unpaid bills to vendors) / Accrued expenses (usually estimated expense not yet invoiced/paid) – are we paying our vendors timely? Do we have enough cash to pay? Loans – do we have the means to pay over time? Financial Transparency – Financial Reports (continued) Statement of Activity (profit & loss statement) Shows the organization’s revenue and expenses for a specific period of time. The report reflects the changes to an organization’s net assets resulting from income and expenses that occur during the current period. Revenue less expenses = change in net assets Revenue greater than expenses = Surplus (profit) Revenue less than expenses = Deficit (loss) Report should